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TESS VIGELAND: Do you know someone out of work? Based on the unemployment rate, there's a good chance you do. In some parts of the country, it's well over 10 percent. Millions of those who are out of work collect unemployment benefits. Ask them if it covers all their bills, and you'll likely get an emphatic "no." That's why some are getting a bit enterprising, looking for work that pays in cold hard cash.
Ashley Milne-Tyte reports.
Ashley Milne-Tyte: Michael used to test software for a living. He's 35 and lives in Seattle. Last year, a longstanding contract ended. He couldn't find a new job, but he qualified for unemployment.
Michael: I'm getting $272 a week. Which is just, bare bones. It's so bad that at one time I was going to the food bank. And, you know when you're really hungry and when you're facing eviction, you've got to do something.
So he started looking for work on the side. He found it pretty quickly.
Michael: So right now I have Craigslist open. And what I've done is I've opened three different tabs: I've opened free stuff, all gigs and all jobs.
He's found all sorts of work this way: software testing, landscaping, bouncing and lots of focus groups. All have paid cash. He says some weeks he's earned three times as much as his benefits check. Like everyone on unemployment, he's meant to report any earnings to his unemployment insurance office. Then they adjust his benefits down. So how does Michael answer the question, have you earned any money this week?
Michael: I opt to say, you know, no. I opt to say no, I have not. Because this is my own hard work, this is my own ingenuity, this is my own genius, and I am still looking for work every day.
He doesn't see it as fraud. He says the money keeps him fed, housed and able to continue looking for full time work. After rent, unemployment would leave him $47 a week for food and bills.
Sudhir Venkatesh is a sociology professor at Columbia University. He studies the underground economy and the attitudes of those who work within it.
Sudhir Venkatesh: Morality is a very fluid part of one's life when they're economically vulnerable. We know this by studying the poor. That if it's a choice between being moral and putting food on your table to feed your children, you'll see that poor people are desperate, and they do what they need to do to survive.
I spoke to Venkatesh at a Starbucks in Manhattan. He says a lot people with unconventional work arrangements hang out in coffee shops, which makes them a great place to do research. He says all kinds of employers are prepared to pay people under the table.
Venkatesh: I was in a cafe a little while ago where I met somebody who was working in a cafeteria for a major law firm, and she was laid off. And she was re-hired as a cook, which she was doing before. And the way she was paid was that she was given money from petty cash. The law firm also allowed her to use an apartment that they had, because she couldn't pay her rent.
He says many companies hit by the downturn need clean offices and security guards, but feel they can no longer afford the expense of an official work force. So they lay off workers and re-hire them off the books, paying less than what the workers earned before.
He says about a third of the people he talks to in cafes are drawing unemployment and working for cash on the side.
Venkatesh: What differentiates this economic climate from previous ones is that the people that are doing that may not return to a full time job, and there may not be a prospect of a full time job that's waiting them. Because we're seeing that the quote-unquote "economic recovery" is not bringing job growth.
Michael: Hey Alexander, how ya doing buddy? What's going on?
Alexander the cat: Meow.
Across the country in Seattle, Michael's got a lot of time to play with his cat Alexander.
It's been almost a year and Michael's unemployment is about to run out. He's applying for an extension.
Michael: I never thought that I would be on the edge like this. And a year is longer than I ever thought -- in this kind of like technological utopia that we live here, here in Seattle, that I'd be out of work.
Recruiters do call. Michael's had 10 interviews this year but none of them have gone anywhere. He's thinking about signing up for a malaria study. It would pay $8,000, but he's not sure it's worth the risk of getting sick even for that kind of money. He'll keep combing the Internet for whatever work he can find -- as long as it pays cash.
I'm Ashley Milne-Tyte for Marketplace Money.